Long-term capital gain
Certified Financial Planner glossary · Certified Financial Planner
Definition
Gain on a capital asset held more than one year, generally taxed under the preferential rate schedule.
Long-term capital gain in plain English
A stock held thirteen months is sold, and the client expects the preferential capital gains schedule. Long-term capital gain is gain on a capital asset held more than one year, generally taxed under that preferential rate schedule. Ordinary income fills brackets first; preferential rates stack afterward. Holding-period math and stacking order both matter. A one-year-and-a-day holding period is not enough if ordinary income has already pushed the client into a higher preferential bracket.
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